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Recurring theme
About: Reginald Tucker is U.S. Editor of Renewable Energy Focus Feature article
Recurring theme U.S. industry participants got stuck into the renewables sector at RETECH. Our U.S. Editor Reg Tucker finds the same themes still stunting industry growth.
I
T’S NOT so much the technology or infrastructure requirements that are restricting greater investment renewable energy programs in the U.S. Rather, industry observers say, inconsistencies in policy are hampering implementation. Such was the recurring theme of many of the sessions presented during RETECH 2013, the 5th Annual Renewable Energy Technology Conference & Exhibition held in Washington, D.C., in early September 2013. The event kicked off in proper fashion at the Marriott Wardman Park, with a robust program entailing spirited roundtable discussions and breakout sessions covering both the challenges and opportunities facing the U.S. renewable energy industry. Session themes covered a broad swathe of issues, panel members ranging from users of renewable energy technologies to policy experts, as well as industry consultants and project managers.
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September/October 2013 | Renewable Energy Focus
Online: renewableenergyfocus.com US Energy Department invests US$16 million in tidal energy http://tinyurl.com/oz48r43 US Solar prices continue decline http://tinyurl.com/px66l2s US Army awards Solar contracts http://tinyurl.com/pfyfut5 US wind energy pricing near all-time low? http://tinyurl.com/p3cse6w
Feature article
Conference highlights A mix of stakeholders traded comments and observations in the opening general session, “Through the Looking Glass: The Future of Renewable Energy Technology.” Panel members included: Rep. Paul Tonko (D-NY), U.S. House of Represenatives; Douglas Tucker, Senior Facilities Energy Engineer, Office of the Assistant Secretary of the Air Force for Installations, Environment & Logistics; Stephen Lacey, senior editor, Greentech Media; and Katherine Jennrich, corporate sustainability and energy services specialist for Walmart. MacKinnon Lawrence, Navigant Research, served as moderator. MacKinnon opened the discussion by providing an interesting statistic: “17% of global renewable energy supply will be met by the year 2020 utilising existing infrastructure.” In the same breath, he asked panel members — particularly those with responsibility for purchasing power agreements — to provide their own assessments of the state of renewable energy in the U.S. Walmart’s Jennrich chimed in early (and often), initially citing the company’s hallmark 2020 Green Initiative (nb: earlier this year, Walmart president and CEO Mike Duke announced the company’s next step on the path to achieving its goal of being supplied 100 per cent by renewable energy by 2020. According to the Solar Energy Industries Association, Walmart has more solar power capacity and number of systems than any other company in America). Jennrich explained that among the milestones - in 2012 alone - Walmart had added nearly 100 renewable energy projects, bringing the total number of Walmart projects in operation worldwide to nearly 300 today. Furthermore, he said, Walmart’s sixfold increase in renewable energy projects is expected to be equal to eliminating the need for roughly two U.S. fossil fuel power plants. The mega-retailer also said it will have cut 9 million metric tons of greenhouse gas (GHG) emissions, the equivalent of taking 1.5 million cars off the road, in effect halting the growth of GHG emissions from the company’s
Encouragement: Carl Zichella, director of Western Transmission at the National Resources Defense Council (and moderator of the panel discussion, Rethinking Energy Policy to Develop a Renewable Future) is encouraged by the conversations currently taking place between U.S. Government leaders and officials at state level. largest GHG source – energy used to power buildings – by 2020. For the first time, Walmart is projecting this GHG decrease even with significant anticipated growth in stores and sales. While much progress has been made in terms of retrofitting facilities and otherwise maximising energy efficiencies, Jennrich believes there’s potential for even greater successes, providing the industry creates the right “environment.” In particular, she said there was a “dire need” for more harmonised policies pertaining to renewable energy. “We need standardised ‘boiler plate’ rules, especially regarding interconnections,” she said. “It’s difficult to do a suite of deals when you’re dealing with 900 utilities.” Rep. Tonko was in agreement on the need for uniform policy, taking it a step farther by tying together energy policy with proposed tax reform. For this part, Tonko has been trying to
encourage more “progressive thinking” among his fellow legislators as it pertains to green energy development, funding and implementation. “I ran [for office] on a platform of having a need for a sound, comprehensive energy plan,” he stated. For starters, this would require the development of budget-laden incentives, along with more continuity to provide stability. “This would encourage greater private sector investment,” he added. Tonko provided a real-world example by citing the energy situation in Long Island, New York — a region notorious for having one of the highest electricity rates in the country. He identified this area as a prime opportunity for solar installations, particularly as homeowners continue to repair and/or replace property in the wake of Superstorm Sandy, which ravaged the Northeast last fall. Sadly, Tonko added, the lack of consistent policy is strangling progress. “We are in a global race in the competition for energy, but internally you could say we are competing with 50 States — each of which has its own policies,” he explained. “Creating a national portfolio standard would be a critical first step.” There are some who believe we are gradually making headway in that direction. Carl Zichella, director of Western Transmission at the National Resources Defense Council (and moderator of the panel discussion, Rethinking Energy Policy to Develop a Renewable Future), gave a nod to the Obama Administration. “The Government has been doing a lot to get Federal Agencies to work together and coordinate between States. “We all need to get on the same page.” On that regard, the U.S. could learn much from Germany — a country that is much farther along in the adoption of renewable energy technologies. “The lesson Germany provides is that it streamlined the permitting process,” Greentech Media’s Lacey stated (what’s more, the Germans are adopting the technologies at roughly half the cost). “In Germany, the permitting process usually takes 7 days compared to at least 75 days here in the U.S.”
September/October 2013 | Renewable Energy Focus
39
Feature article
Cost is also a determining factor in the choice between renewable energies and conventional technologies, as well as between the available options within the renewable energy sector itself. One case in point is the U.S. Air Force’s approval of cost-competitive fuels for its legacy C-17 cargo fleet. To date, according to Douglas Tucker, of the Office of the Assistant Secretary of the Air Force for Installations, Environment & Logistics, 14-plus fuels have been accepted: “The emphasis is on efficiency for military operations,”
balance the budget) has had a chilling effect on a vast number of Government spending programs, including those supporting alternative energy programs. On top of that, notes Rep. Tonko, is the political battle. As he explains it, even in those situations where the Federal Government has committed funding/incentives to encourage renewable energy development in the face of broader cuts, Tonko said the U.S. Government has been unfairly labeled as supporting “special inter-
gain more traction if it was broadened into a larger discussion on tax reform. “Right now, given the political environment, there are limited opportunities for any single Bill to get to the floor.” Government loans offer another option, especially as the credit market loosens. Douglas Schultz, who oversees the loan program at the U.S. Department of Energy, has seen a positive impact. By his count, at least 12 out 19 clean energy projects backed by such loans are currently producing enough
By the end of 2020, Walmart is looking to drive the production or procurement of 7 billion kWh of renewable energy globally every year, a 600-per cent increase over 2010 levels. Tucker explained, adding that the U.S. Air Force is already working with next-generation systems on how it deploys its fleet. On the facilities side, Tucker said the ultimate goal of the Air Force is to get the greatest return on its investment. Similar cost concerns apply to Walmart, which is currently in an aggressive retro-installation mode. By the end of 2020, the retailer is looking to drive the production or procurement of 7 billion kWh of renewable energy globally every year, a 600per cent increase over 2010 levels while reducing the kWh/sq. ft. energy intensity required to power its buildings globally by 20 per cent compared to 2010 levels. However, despite this, there still are budgetary considerations: “We want to integrate new technologies, but it has to be feasible from a cost perspective,” Jennrich added.
The incentive dilemma To help mitigate or defray the costs associated with the execution of renewable energy projects, investors naturally look to Government for support in the way of tax breaks and other incentives. However, sequestration (mandatory federal budget cuts that went into effect earlier this year due to the inability of a divided Congress to broker a deal to
40
September/October 2013 | Renewable Energy Focus
est” projects. “It’s not a level playing field,” he stressed. That’s not to say that there haven’t been success stories based on non-traditional financing models. According to Greentech Media’s Lacey, more than 3,000 residential solar installations have been secured — all without the assistance of California state initiatives.
“Show me the money!” Some industry observers have other ideas in this regard. In a follow-up roundtable session, Where’s the Money? Financing Renewable Energy Projects, Uday Varadarajan, senior analyst with the Climate Policy Initiative, talked about the possibilities of applying master limited partnerships, or “MLPs” to lower project financing costs. Whereas Federal tax incentives are critical (but not particularly costeffective, according to Varadarajan), MLPs — which can be traded on the open market — could significantly reduce funding commitments. MLPs, in theory, could reduce the cost of wind power purchasing agreements relative to tax equity. But there’s just one problem, Varadarajan notes: MLPs are not currently open to the renewable energy sector. “The MLP Parity Act talks have been positive,” Varadarajan stated. However, he thinks the issue would
power to run 450,000 homes. Interestingly, some industry observers feel there’s actually been too much reliance on Federal incentive programs. Scott Foster, senior vice president, managing director, federal operations at Hannon Armstrong – which makes debt and equity investments in sustainable infrastructure projects - believes some of the projects that come up for financing are just not investment-worthy: “The main problem we’re seeing is that some project managers are just not realistic; they think they have the best project,” he stated. And his recommendation? “You have to have good advisors on your team.” Despite the inherent challenges — and unresolved issues — proponents point to positive movement for renewable energy projects. Nick Sangermano of Ambata Capital Partners, which raises capital for companies across various sectors, said he has “never been more encouraged than he is at present about the prospect of renewable energy.” From his perch, he is predicting investment in renewable will reach two-to-three times the current level by 2030. “I’m finding that the technology is becoming more commonplace.” See Reg Tucker’s interview with Rhone Resch, SEIA, on page 42.
Recurring theme U.S. industry participants got stuck into the renewables sector at RETECH. Our U.S. Editor Reg Tucker finds the same themes still stunting industry growth.
I
T’S NOT so much the technology or infrastructure requirements that are restricting greater investment renewable energy programs in the U.S. Rather, industry observers say, inconsistencies in policy are hampering implementation. Such was the recurring theme of many of the sessions presented during RETECH 2013, the 5th Annual Renewable Energy Technology Conference & Exhibition held in Washington, D.C., in early September 2013. The event kicked off in proper fashion at the Marriott Wardman Park, with a robust program entailing spirited roundtable discussions and breakout sessions covering both the challenges and opportunities facing the U.S. renewable energy industry. Session themes covered a broad swathe of issues, panel members ranging from users of renewable energy technologies to policy experts, as well as industry consultants and project managers.
38
September/October 2013 | Renewable Energy Focus
Online: renewableenergyfocus.com US Energy Department invests US$16 million in tidal energy http://tinyurl.com/oz48r43 US Solar prices continue decline http://tinyurl.com/px66l2s US Army awards Solar contracts http://tinyurl.com/pfyfut5 US wind energy pricing near all-time low? http://tinyurl.com/p3cse6w
Feature article
Conference highlights A mix of stakeholders traded comments and observations in the opening general session, “Through the Looking Glass: The Future of Renewable Energy Technology.” Panel members included: Rep. Paul Tonko (D-NY), U.S. House of Represenatives; Douglas Tucker, Senior Facilities Energy Engineer, Office of the Assistant Secretary of the Air Force for Installations, Environment & Logistics; Stephen Lacey, senior editor, Greentech Media; and Katherine Jennrich, corporate sustainability and energy services specialist for Walmart. MacKinnon Lawrence, Navigant Research, served as moderator. MacKinnon opened the discussion by providing an interesting statistic: “17% of global renewable energy supply will be met by the year 2020 utilising existing infrastructure.” In the same breath, he asked panel members — particularly those with responsibility for purchasing power agreements — to provide their own assessments of the state of renewable energy in the U.S. Walmart’s Jennrich chimed in early (and often), initially citing the company’s hallmark 2020 Green Initiative (nb: earlier this year, Walmart president and CEO Mike Duke announced the company’s next step on the path to achieving its goal of being supplied 100 per cent by renewable energy by 2020. According to the Solar Energy Industries Association, Walmart has more solar power capacity and number of systems than any other company in America). Jennrich explained that among the milestones - in 2012 alone - Walmart had added nearly 100 renewable energy projects, bringing the total number of Walmart projects in operation worldwide to nearly 300 today. Furthermore, he said, Walmart’s sixfold increase in renewable energy projects is expected to be equal to eliminating the need for roughly two U.S. fossil fuel power plants. The mega-retailer also said it will have cut 9 million metric tons of greenhouse gas (GHG) emissions, the equivalent of taking 1.5 million cars off the road, in effect halting the growth of GHG emissions from the company’s
Encouragement: Carl Zichella, director of Western Transmission at the National Resources Defense Council (and moderator of the panel discussion, Rethinking Energy Policy to Develop a Renewable Future) is encouraged by the conversations currently taking place between U.S. Government leaders and officials at state level. largest GHG source – energy used to power buildings – by 2020. For the first time, Walmart is projecting this GHG decrease even with significant anticipated growth in stores and sales. While much progress has been made in terms of retrofitting facilities and otherwise maximising energy efficiencies, Jennrich believes there’s potential for even greater successes, providing the industry creates the right “environment.” In particular, she said there was a “dire need” for more harmonised policies pertaining to renewable energy. “We need standardised ‘boiler plate’ rules, especially regarding interconnections,” she said. “It’s difficult to do a suite of deals when you’re dealing with 900 utilities.” Rep. Tonko was in agreement on the need for uniform policy, taking it a step farther by tying together energy policy with proposed tax reform. For this part, Tonko has been trying to
encourage more “progressive thinking” among his fellow legislators as it pertains to green energy development, funding and implementation. “I ran [for office] on a platform of having a need for a sound, comprehensive energy plan,” he stated. For starters, this would require the development of budget-laden incentives, along with more continuity to provide stability. “This would encourage greater private sector investment,” he added. Tonko provided a real-world example by citing the energy situation in Long Island, New York — a region notorious for having one of the highest electricity rates in the country. He identified this area as a prime opportunity for solar installations, particularly as homeowners continue to repair and/or replace property in the wake of Superstorm Sandy, which ravaged the Northeast last fall. Sadly, Tonko added, the lack of consistent policy is strangling progress. “We are in a global race in the competition for energy, but internally you could say we are competing with 50 States — each of which has its own policies,” he explained. “Creating a national portfolio standard would be a critical first step.” There are some who believe we are gradually making headway in that direction. Carl Zichella, director of Western Transmission at the National Resources Defense Council (and moderator of the panel discussion, Rethinking Energy Policy to Develop a Renewable Future), gave a nod to the Obama Administration. “The Government has been doing a lot to get Federal Agencies to work together and coordinate between States. “We all need to get on the same page.” On that regard, the U.S. could learn much from Germany — a country that is much farther along in the adoption of renewable energy technologies. “The lesson Germany provides is that it streamlined the permitting process,” Greentech Media’s Lacey stated (what’s more, the Germans are adopting the technologies at roughly half the cost). “In Germany, the permitting process usually takes 7 days compared to at least 75 days here in the U.S.”
September/October 2013 | Renewable Energy Focus
39
Feature article
Cost is also a determining factor in the choice between renewable energies and conventional technologies, as well as between the available options within the renewable energy sector itself. One case in point is the U.S. Air Force’s approval of cost-competitive fuels for its legacy C-17 cargo fleet. To date, according to Douglas Tucker, of the Office of the Assistant Secretary of the Air Force for Installations, Environment & Logistics, 14-plus fuels have been accepted: “The emphasis is on efficiency for military operations,”
balance the budget) has had a chilling effect on a vast number of Government spending programs, including those supporting alternative energy programs. On top of that, notes Rep. Tonko, is the political battle. As he explains it, even in those situations where the Federal Government has committed funding/incentives to encourage renewable energy development in the face of broader cuts, Tonko said the U.S. Government has been unfairly labeled as supporting “special inter-
gain more traction if it was broadened into a larger discussion on tax reform. “Right now, given the political environment, there are limited opportunities for any single Bill to get to the floor.” Government loans offer another option, especially as the credit market loosens. Douglas Schultz, who oversees the loan program at the U.S. Department of Energy, has seen a positive impact. By his count, at least 12 out 19 clean energy projects backed by such loans are currently producing enough
By the end of 2020, Walmart is looking to drive the production or procurement of 7 billion kWh of renewable energy globally every year, a 600-per cent increase over 2010 levels. Tucker explained, adding that the U.S. Air Force is already working with next-generation systems on how it deploys its fleet. On the facilities side, Tucker said the ultimate goal of the Air Force is to get the greatest return on its investment. Similar cost concerns apply to Walmart, which is currently in an aggressive retro-installation mode. By the end of 2020, the retailer is looking to drive the production or procurement of 7 billion kWh of renewable energy globally every year, a 600per cent increase over 2010 levels while reducing the kWh/sq. ft. energy intensity required to power its buildings globally by 20 per cent compared to 2010 levels. However, despite this, there still are budgetary considerations: “We want to integrate new technologies, but it has to be feasible from a cost perspective,” Jennrich added.
The incentive dilemma To help mitigate or defray the costs associated with the execution of renewable energy projects, investors naturally look to Government for support in the way of tax breaks and other incentives. However, sequestration (mandatory federal budget cuts that went into effect earlier this year due to the inability of a divided Congress to broker a deal to
40
September/October 2013 | Renewable Energy Focus
est” projects. “It’s not a level playing field,” he stressed. That’s not to say that there haven’t been success stories based on non-traditional financing models. According to Greentech Media’s Lacey, more than 3,000 residential solar installations have been secured — all without the assistance of California state initiatives.
“Show me the money!” Some industry observers have other ideas in this regard. In a follow-up roundtable session, Where’s the Money? Financing Renewable Energy Projects, Uday Varadarajan, senior analyst with the Climate Policy Initiative, talked about the possibilities of applying master limited partnerships, or “MLPs” to lower project financing costs. Whereas Federal tax incentives are critical (but not particularly costeffective, according to Varadarajan), MLPs — which can be traded on the open market — could significantly reduce funding commitments. MLPs, in theory, could reduce the cost of wind power purchasing agreements relative to tax equity. But there’s just one problem, Varadarajan notes: MLPs are not currently open to the renewable energy sector. “The MLP Parity Act talks have been positive,” Varadarajan stated. However, he thinks the issue would
power to run 450,000 homes. Interestingly, some industry observers feel there’s actually been too much reliance on Federal incentive programs. Scott Foster, senior vice president, managing director, federal operations at Hannon Armstrong – which makes debt and equity investments in sustainable infrastructure projects - believes some of the projects that come up for financing are just not investment-worthy: “The main problem we’re seeing is that some project managers are just not realistic; they think they have the best project,” he stated. And his recommendation? “You have to have good advisors on your team.” Despite the inherent challenges — and unresolved issues — proponents point to positive movement for renewable energy projects. Nick Sangermano of Ambata Capital Partners, which raises capital for companies across various sectors, said he has “never been more encouraged than he is at present about the prospect of renewable energy.” From his perch, he is predicting investment in renewable will reach two-to-three times the current level by 2030. “I’m finding that the technology is becoming more commonplace.” See Reg Tucker’s interview with Rhone Resch, SEIA, on page 42.